Zawya.com- The petrodollar-driven sovereign wealth funds (SWFs) will become major powerbrokers in global financial markets, said Walter Kielholz, chairman of Credit Suisse Group.
Speaking at a symposium, The Changing Contours of Global Finance organised by the Institute of International Finance, Kielholz said there are four major power brokers emerging in global financial markets such as the petrodollar-driven sover-eign wealth funds, Asian central banks, private equity and hedge funds.
“These four new power blocs together currently control more than $10 trillion in assets and they have much more liquidity than traditional banking sources,” he said.
According to a recent estimate by Morgan Stanley, SWFs control close to $2.5 trillion in assets. Of this, the UAE has close to $1 trillion.
The growing oil revenue surpluses have now started flowing into the emerging markets. Total net direct investment in developing countries will likely rise to $212.9 billion this year from $167.3 billion last year, boosted in part by spending by sovereign wealth funds, or investments controlled by state operators.
While the surging energy prices are expected to keep the petrodollar-driven sov-ereign funds powerful for the foreseeable future, the ever growing structural shift in trade balances in favour of Asian economies will see central bank reserves bulging and these funds finding their way into the global financial system.
